Waste and recycling services provider Quest Resource (NASDAQ: QRHC) fell short of the market’s revenue expectations in Q4 CY2025, with sales falling 15.8% year on year to $58.91 million. Its GAAP loss of $0.08 per share was in line with analysts’ consensus estimates.

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Company Overview

Recycling corporate waste to help companies be more sustainable, Quest Resource (NASDAQ: QRHC) is a provider of waste and recycling services.

Revenue Growth

A company’s long-term performance is an indicator of its overall quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years. Over the last five years, Quest Resource grew its sales at an incredible 20.5% compounded annual growth rate. Its growth beat the average industrials company and shows its offerings resonate with customers.

Long-term growth is the most important, but within industrials, a half-decade historical view may miss new industry trends or demand cycles. Quest Resource’s recent performance marks a sharp pivot from its five-year trend as its revenue has shown annualized declines of 6.9% over the last two years.

This quarter, Quest Resource missed Wall Street’s estimates and reported a rather uninspiring 15.8% year-on-year revenue decline, generating $58.91 million of revenue.

Looking ahead, sell-side analysts expect revenue to grow 3.2% over the next 12 months. Although this projection suggests its newer products and services will spur better top-line performance, it is still below the sector average.

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Operating Margin

Quest Resource was profitable over the last five years but held back by its large cost base. Its average operating margin of 1.2% was weak for an industrials business. This result isn’t too surprising given its low gross margin as a starting point.

Looking at the trend in its profitability, Quest Resource’s operating margin decreased by 4.1 percentage points over the last five years. This raises questions about the company’s expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability. Quest Resource’s performance was poor no matter how you look at it - it shows that costs were rising and it couldn’t pass them onto its customers.

In Q4, Quest Resource’s breakeven margin was 0.9%, up 3.2 percentage points year on year. The increase was encouraging, and because its operating margin rose more than its gross margin, we can infer it was more efficient with expenses such as marketing, R&D, and administrative overhead.

Earnings Per Share

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

Sadly for Quest Resource, its EPS declined by 75.4% annually over the last five years while its revenue grew by 20.5%. This tells us the company became less profitable on a per-share basis as it expanded.

We can take a deeper look into Quest Resource’s earnings to better understand the drivers of its performance. As we mentioned earlier, Quest Resource’s operating margin expanded this quarter but declined by 4.1 percentage points over the last five years. Its share count also grew by 12.3%, meaning the company not only became less efficient with its operating expenses but also diluted its shareholders.

Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.

For Quest Resource, its two-year annual EPS declines of 44.4% show it’s still underperforming. These results were bad no matter how you slice the data.

In Q4, Quest Resource reported EPS of negative $0.08, up from negative $0.46 in the same quarter last year. Despite growing year on year, this print missed analysts’ estimates. Over the next 12 months, Wall Street expects Quest Resource to improve its earnings losses. Analysts forecast its full-year EPS of negative $0.73 will advance to negative $0.24.

Key Takeaways from Quest Resource’s Q4 Results

We struggled to find many positives in these results. Its revenue missed and its EBITDA fell short of Wall Street’s estimates. Overall, this was a softer quarter. The stock traded down 1% to $1.45 immediately after reporting.

Quest Resource didn’t show it’s best hand this quarter, but does that create an opportunity to buy the stock right now? When making that decision, it’s important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here (it’s free).